What’s Wrong With Electronic Arts?

John Riccitiello just announced that he is resigning as chief executive of Electronic Arts after six years at the helm.

In his farewell letter to employees, he said EA had “never been in a better position as a company.” But he also admitted that EA will “come in at the low end of, or slightly below, the financial guidance we issued to the Street, and we have fallen short of the internal operating plan we set one year ago.”

EA has a number of bright spots, to be sure. Its digital business is doing well, with more than a dozen games in the top-200 rankings of the Apple App Store’s free and paid apps, for example. Mobile is its fastest-growing segment, Riccitiello said in his letter.

“Battlefield 3,” one of its recent first-person shooting games, has gone over well with fans. BioWare, one of its top studios, has made hit games like the Mass Effect series. It recently came out with Dead Space 3, which scored a 78 out of 100 across 64 reviews, according to review-aggregating site Metacritic.

One big downside is likely “Star Wars: The Old Republic.” It’s an online, persistent world set in the Star Wars Universe, called an MMORPG (massively multiplayer online role-playing game). The goal was to create a persistent subscription business that EA could count on for revenue, much like Activision-Blizzard’s World of Warcraft.

But “Star Wars: The Old Republic” was made free-to-play, not unlike Zynga 's social games, where users can pay to become more powerful or advance more quickly through the game. It’s a new kind of business model that doesn’t deliver the kind of consistent stream of revenue that EA typically sees. Pacific Crest analyst Evan Wilson said this “Star Wars” game is now on track to become “one of the biggest flops of all time.”

The Medal of Honor franchise also hasn’t fared well. Earlier this year, EA’s chief financial officer Blake Jorgensen said in an interview that the challenging holiday quarter was marked by lower-than-expected sales of the company’s war-simulation shooting game “Medal of Honor: Warfighter.”

Its acquisition of Playfish social games maker has also been rocky, with co-founder Kristian Segerstrale taking off recently. That could easily be attributed to a generally difficult environment for social-powered games on the Web, as seen by Zynga’s difficulties navigating to becoming a mobile-focused company.

EA declined to comment further.

Riccitiello has left EA with plenty to work with, but some hard questions to answer. EA’s stock fell more than 60% during his six-year term at the company. His departure comes down to accountability, he said in his farewell letter.

“He was a figure who is blamed for a lot of EA’s woes in the last few years and wasn’t well liked by investors,” Mr. Wilson said.